Melbourne: Australia's track cyclists came off second best in a toe-to-toe battle with arch-rivals Britain at the Olympic test event at the weekend but emerged from the velodrome confident they will return to London with medal contenders in every category.

Despite a morale-boosting victory over the hosts to win the men's team pursuit on the final day on Sunday, the World Cup meeting was largely an exercise in frustration for the world champion-laden "Cyclones".

The Australian team finished second in the medal standings with two golds, including one in the non-Olympic scratch category, as packed stands roared British cyclists on to a table-topping five titles in the four-day event.

World champion Anna Meares, who defeated long-time rival Victoria Pendleton in the women's sprint, was nonetheless upset in the gold medal race by China's Guo Shuang.

Meares set a world record with Kaarle McCulloch in the team sprint on Friday, only for it to be wiped out by Pendleton and Jessica Varnish hours later in the title race.

Despite the disappointments, the Cyclones were buoyed by a surprise silver medal for Adelaide-born 20-year-old Annette Edmondson in the multi-race omnium, her first ride in the category at international level.

Moreover, the team overall would benefit from knowing the scale of their task with the next benchmark to come at the world championships on home soil in April, according to Cycling Australia's national performance director Kevin Tabotta.

"We've really been on top for the last couple of years but it is always a challenge to stay on top," Tabotta said in a media release.

"When you're coming from behind it is sometimes an easier task, easier to keep people's heads on and expectations at a level but when you're competing from the front you have to keep the wolves at bay and keep lifting it a notch every time.

"We've worked pretty hard over the last four years to give ourselves more options and I don't think I'm being unrealistic in saying we believe we're in the hunt in most Olympic events but the difference between first place and fourth place is really up to them on the day.

"It's easy to be favourite going in and run fourth or fifth but also quite possible for riders on the fringe to step up and win medals," he added. "I think we're a medal chance in every event."

Australia have also yet to show their full hand as far as the men are concerned.

They dropped Luke Durbridge from their youthful world championship-winning men's pursuit team to give 18-year-old Alex Edmondson, the younger brother of silver-winning Annette, a ride at the World Cup.

The four, dubbed "the boy band" by some British media, thrashed the home team of Steven Burke, Edward Clancy, Peter Kennaugh and Geraint Thomas by almost two seconds for the World Cup title.

The Australians will be further pushed by internal competition for Olympic berths, with elite riders Cameron Meyer, Glenn O'Shea and Mitchell Mulhearn waiting in the wings.

"We'll always run five or six guys in the mix all the way through and that's important for them and they understand that internal competition drives them along," Tabotta added.

"But there will come a time when we'll settle the team in and move forward towards August."